Maikštėnas, who brought 500 million to Lithuania: the most important thing was to show that we are not Eastern Europe

“When we drove and offered to participate in the IPO, we had to accomplish two things. First, sell your stock history to attract ESG (environmental, social, government) investors to the region. Second, to clarify that we are not an Eastern Europe, but a “Nordic state”, he said in an interview with Delfi.

In conversation, immediately after the bell opening ceremony, D. Maikštėnas called Ignitis a success in the IPO and urged not to underestimate the results of the first day on the stock exchange.

Read here what an IPO is and why it’s called a decade deal.

– Today is a historic day: Ignitis Group shares are traded on the Nasdaq Baltic market. What emotions?

– There is a large increase, but also the knowledge that we have not yet fully realized what we have done. The last year, and especially the last 3 months, has been a great marathon of very intense work, with people working shortly after 3 in the afternoon. per day. Only now are we going out and completing this successful transaction. We go back and focus on the implementation of the entire strategy. There is joy and at the same time reluctance, to move on.

– It’s probably difficult to immediately assess how things went, but how do you think the initial public offering went?

– I appreciate it particularly well. We need to understand that we have succeeded where we have failed for anyone throughout the region. We have raised nearly 500 million in equity capital, which will ensure sustainable growth for the next 10 years. It will be a difficult period, with challenges and sensitive markets. During that period, we have been able to attract the large number of ESG investors we need to have a sustainable shareholder base to support our strategy for the next decade.

Looking at the full composition of the book (investor list – “Delfi”), we have 2/3 of long-term ESG investors, 9 percent. Retail and other hedge funds is a particularly well-structured book, a very good start to further developing and growing the company.

– Explain who the ESG investors are.

– E, that’s it environmental – monitor compliance with these indicators. Yes, this Social – indicators, instruments of social responsibility. If the company does not comply with them, the investment in it is reduced. There is also a G – governance, is a corporate governance standard. When we have a dominant number of such investors, then by keeping the cartel in place for the company, its value also increases.

Because our own strategy is ESG, focused on sustainable energy, high corporate governance, that combination is essential for us. Have few hedge funds, and those that allow a long-term strategy.

Risk coverage or coverage The funds are also beneficial if they are in healthy quantities, as they provide some liquidity and turnover in the stock market. It is very bad, if the shares are frozen, what situation we had with ESO or Ignitis gamyba. There were days when the turnover was zero, there were days when the ESO turnover was several thousand. To have real liquidity, the ratio was very good.

– How would you describe the demand for Ignitis shares? What are the results of the first minutes of negotiation? When I looked just after 10pm it was 22.7 euros.

– Daily trading does not necessarily reflect actual demand. The most important thing for us and what made us happy was that we received a strong demand for ESG funds. This is a guarantee of sustainable growth and share price.

As pioneers, we have a role to play in teaching local markets a bit about what is normal practice for international IPOs. It was normal practice for the union to send a “covered books” message through Bloomberg. It showed healthy growth in demand, with books covered on the third day of the tour.

Yes, there were many questions about why the books are not being released. Again, this is typical practice for an international IPO. For example, there were nine IPOs on the London Stock Exchange, where Ignitis is listed, and none of them disclosed the number of books. Because the demand has many dimensions: who is inside, what type of investors, in what box is it formed and what is the size of the demand, etc.

We rate the company in the box where the highest and most sustainable demand has developed, and we are very satisfied with it.

– Will the services of the stabilization executor Swedbank be needed?

– You never know what will happen in global markets. The stabilization instrument is specifically designed to do this if, in the event of some market disruptions and a new company entering the market, it could be radically affected by global turmoil.

Stabilization is used for this. Practice will show whether or not they will be necessary. But throughout our history of equity, resilience has been combined with growth. Resilience derived from the fact that we have a large part of operations that are resilient and sustainable, as we saw in the first half of the year, the results were not affected by Covid-19.

There is also a growth story where we have a share of green production that will continue to steadily increase in share value. We have now been able to reconcile both the dividend yield and the growth record.

– Did you buy the shares yourself?

– Yes, the guarantee for employees was 200 shares. I applied to 400 and bought.

– How do you assess the price of the IPO of 22.5 euros? There have been rumors that it will go up to 28 euros.

– I can only repeat that we have announced the issue and distributing the issue of shares at any point in it is a great success. We raised 500 million in capital stock. We have made the wise decision to place the stock price where the greatest demand has formed.

– 73 percent. The shares would remain with the state, and would you agree that Ignitis is worth $ 1.671 billion today? euros?

– The value of companies is now determined by the market. That value is what it is. She is right in every present moment. In fact, it is not for nothing that Ignitis Group is the most valuable listed company in the Baltic countries. Both in terms of its scope and its long-term strategy, it is very much in line with what is happening in Europe. It is a world-class company that has no legacy assets that are dirty, unsustainable, etc.

All parts of the business are refined, looking to the future, to further increase shareholder value. Equally important is the energy security of Lithuania and the entire region. The need for local production is huge and we will be able to do it very well by operating through the three Baltic countries and Poland.

– Perhaps in the future it would be possible to offer even more shares to the public?

– Our decision to make an initial public offering was exactly at the time and to the extent necessary to implement the strategy. It is not done to show off or just to hold an initial public offering. Yes, it also has very positive side effects on the capital market, the reputation of the country.

However, the scope of the full IPO, the history of equity and the shareholder structure to which we applied were successful in implementing the strategy. According to him, by 2030 we want to develop up to 4 gigawatts of green production. This IPO, combined with the asset rotation strategy (Delfi), provides debt capital.

If there were any major strategy updates, even higher targets, maybe we should increase the size of the debt or see what to do next. The current number provides sustainable financing throughout the period.

– Do you see the possibility that the main shareholder of Ignitis is not the State?

– I am not considering it, because the objective of the IPO was to establish sustainable funding for the strategy. The role of the State in this company is very broad. First of all, because of the strategic assets, which is very important to keep in Lithuanian ownership. At least until the country moves to an even more sustainable level.

Perhaps after synchronization (with Western Europe, which is scheduled for 2025 – “Delphi”) or at some point later. In fact, the government’s equity stake gives a huge credit rating advantage. This translates into low borrowing costs that provide an unprecedented competitive advantage throughout the region. Not only against small players, but also against all other state companies, even international ones.

– Dalius Misiūnas says that the monopoly business is selling too cheap, which is because the IPO takes place too early. How would you answer?

– I see this as a reflection of the former manager. I don’t know what motivated him to say it. Not just Dalius, but other people’s deliberations in recent years have been mixed. From the “smokescreen” to the fact that the IPO will never be what we want to take advantage of from small shareholders. All these considerations, after waiting a certain period, turned out to be the opposite.

I will not evaluate D. Misiūnas comment. I just want to point out that no shares of Ignitis Group have been sold. Here’s the initial public offering, where you get new capital. It means that no part of the property, no shares, and not even a single shareholder’s right has been sold to anyone.

In a secondary distribution of shares, if the state wanted to go out and withdraw money, then it could be said that we want to maximize profitability. In this case, the objective was to finance investments, raise seed capital and, in particular, those investors who ensure sustainable development.

– How will Ignitis reconcile interests when shareholders need dividends and consumers need low energy prices?

– It is a complete classic of this genre. In fact, it is possible and necessary to reconcile the interests of both the majority shareholder and the medium and minority shareholders. Let us understand that the Lithuanian energy system is now truly Western.

Our management team carried out more than a hundred meetings with investors and one of the main tasks was to find out what is the regulatory environment, what is the Lithuanian state in terms of energy policy. That it is a truly Western system, of the Scandinavian type, where tariffs and regulation are separated from the governmental and political cycles.

The regulation is supervised by a regulator that establishes returns and rates that are fair, ensure the development of sustainable infrastructure and fair prices for the consumer. The regulator is not affected in any way by the interests of the shareholders. It is completely independent, which ensures sustainability, trust in the country and society.

When we drove and volunteered to participate in the IPO, we had two things to accomplish. First, sell your equity history to attract ESG investors to the region. Second, make it clear that we are not an Eastern Europe, but a Nordic state.

Both things have been done successfully, so our multipliers are at the level of energy companies such as Emel in Poland or Endesa in Spain. Ignitis has 8.7 in the last 12 months, Emel 8 and Endesa 7.9. It means that we have outperformed Western integrated companies.